Has the Worst of China's Cash Crunch Passed?

6/26/2013 6:34AM

Stocks in Hong Kong and Australia rallied on signs China's central bank is working to end a cash squeeze in the country. The WSJ's Jake Lee asks the Royal Bank of Scotland's China economist if the worst is over.

This transcript has been automatically generated and may not be 100% accurate.

... the ... it's the last ... China's cash crunch ... gospel Osteen on Asia today ... and GE and joined by Louis caps Chief conch on a climbing stock up it's ... a sin is joining Citic stormy sea weeks in China with depression days of constant ... focus through how you seen from you'll see what's happened in a way to the good from it ... yes well thing when we look at what was happening in all we can point to a few technical factors here and there like seasonal demand for morning because companies eager to pay the taxes things like that ... again today it was ... a standoff between ... China's banks and the PDC a standoff that have to do with ... all the news is that these two don't to be with regard to ... extending credit and actually ... backing off ... banks to extend credit at Walsall extend credit quite Fox in the first part of it you're ... sort was that clarification ... and miscommunication about what the policy stance is the great course ... that issue that the PVC bumpier refused for a while to inject liquidity that ... banks said they need to keep the market ... they were ... a real standoff Summit best was saying look what has gone to get away from the PDC ... and that's why they so does seem to come out tasting menu states say they aren't If MC received what to take on that what they getting so the too big for what they dimensions and ... there was is exactly what they once the engine and ... crashed on the banks for the reasons you just ... yes I think so I mean I think the BBC wanted to make a point and the point was made on click here luckily my cooker and the BBC that the smoke in the PCC interested to read ... this escalate and to see that tension ... that was in the interbank market correctly spill over into other financial markets and I think that was when the call when they called it quits when does that look at them if they want to make a point and the awesome and because going forward but for now we just want to instill some comity between made some ... quite promising awesome quite strong commitments in terms of standing by the market also standing by the act today ... how worried should we be about us of China's banks can still hide it seems to know what's on the books ... how much nonperforming loans how much the lending and is well and reporters what's your take on with that ... yes all of this is not going to take away the longer term discussions that we will have with many people being very worried about ... the dog that gets in China the credit expansion ... I think ... and this is as a signal of change that discussion I ate I'm ... personally I think that ... credit expansion in China has been to cost in the last two years and something is to be done about that and I think what they have ... signaled knowledge that they really actually want to contain those more than the lives ... of ... many people very worried about debts are personally ... I would expect that we're going to see some problems some defaults may be found and and bills have risen I still think that ... the overall situation and comfort to know this is happening the mock record I mean what that what the financial sector I personally think ... to be some days old son of a button down the line but it what's the big picture we've seen this in China Connie so this time any ... banks who breaks been kind of grateful costs ... will we see it but Exxon to send crucial personally think that I know we still on track ... good question I mean it's it's one of the questions that we know ... like to see some clarification on what the government's stance in all this is good enough ... previously eight percent was so was the lower bunk beds not anymore ... then we set them into seven on the Hoff percent which is ... the target for for for for this year's growth ... but ... now there are some noises coming from aging people saying no as follows the labor market is holding up maybe it's a seven percent for the where the bottom line is ... the problem of course this at the moment ... that they couldn't Combs optically quite weak and so it could well be that if the data continues to be weak ... then we're going to see ... that these results was to go moment in ... a normal getting into those calls for courts to most ... of the puzzle was going to be tested the show was the standings and openly flank steak but for now to oust chief China economist RBS and use image joining ... that's it Asia's day find JTB but for more on that story and many more please get to WS J don't call